The listed telecommunications sector was an outperformer even in the context of the JSE’s sparking 2025 performance. While the JSE All-Share surged 39% over the course of the year, the second-best performance by any major bourse (behind only Spain’s Ibex), the telecoms board was up 51% for the year.

But only a limited portion of this share price growth can be attributed to the SA market. It has been apparent for several years that SA telecoms is effectively saturated. Mike Gresty, a fund manager at Anchor Capital, describes it, appropriately, as ‘slow-growing and highly penetrated’. He points out that the giant counters on the JSE – MTN and Vodacom (both with market capitalisations of more than ZAR300 billion) – have had to rely on their offshore subsidiaries for growth.

‘Both MTN and Vodacom have been driven by their international operations, for which the stars have aligned, for the moment anyway,’ says Gresty. The biggest offshore markets – Nigeria in MTN’s case and Egypt for Vodacom – have recently experienced currency stability, decent demand for their services and supportive regulatory backdrops. This, Gresty says, has ensured the vicious price competition of the past has not been repeated.

MTN was the first to expand operations on the international stage and now has a presence in 16 markets across Africa with more than 300 million subscribers. It first invested in Nigeria after that country’s telecoms liberalisation in 2001 and listed on the Nigerian Stock Exchange in May 2019. Nigeria typically contributes about 30% to MTN’s revenue. With 87 million subscribers, MTN is the biggest telecoms company in the Nigerian market.

MTN’s Nigerian operation is looking extremely solid after a torrid period. For 2025, the company’s profits were NGN1.1 trillion after recording losses of NGN400 billion in 2024 and NGN137 billion in 2023. The past losses were mostly a result of currency devaluation and high inflation.

At the company’s results presentation in February, Karl Toriola, CEO of MTN Nigeria, said that ‘2025 marked a significant turning point in our business performance and resumption of dividend payments. In the period we returned to profitability, generated stronger free cash flow and restored positive retained earnings and shareholders’ funds’.

Macroeconomic conditions in Nigeria improved in 2025 with a more stable foreign exchange market, improved forex liquidity and a sustained decline in inflation. ‘These factors, supported by our tower lease contract renegotiation, substantially reduced the pressure on our margins, laying a strong foundation for sustainable cash generation and shareholder returns,’ said Toriola.

MTN is in the final stages of exiting the Middle Eastern market, having disposed of operations in Afghanistan (2024), Syria (2026) and Yemen (2021). However, it still owns 49% of Irancell, the second-largest mobile network in Iran. Even before the US/Israel attacks on the country in March, this was a drag on the company’s balance sheet, with US sanctions making it impossible to repatriate funds or move capital out of the country since 2018.

Last year, MTN CEO Ralph Mupita described the Irancell holding as a ‘frozen asset’. But it is more than a billion-dollar financial problem for MTN. It comes with reputational and legal risks too. MTN has no operational say over the firm. Earlier this year, faced with mass insurrection, the Iranian authorities cut connectivity to 4% and unilaterally replaced the CEO with a regime-friendly military veteran. MTN was already in trouble with the US authorities following accusations that it had done business with (US-sanctioned) elements in the Iranian government. MTN is co-operating with an ongoing US Justice Department investigation.

In addition to the US legal ramifications, MTN faces a R74 billion lawsuit from Turkcell, a losing bidder for the original (2005) Iran licence, which alleges that the award was obtained through bribery and corruption. The matter is now before SA’s Constitutional Court, which decided last year that it has jurisdiction over the case.

While MTN began its international diversification soon after the millennium, its great rival, Vodacom has only properly joined the game in the past decade. In that time, it has acquired a 55% stake in Vodafone Egypt (2022) and a stake in East Africa’s dominant player, Safaricom, in 2017. In December 2025, Vodacom bought a portion of the Kenyan government’s remaining Safaricom holding to increase its stake in Safaricom from 35 to 55%, securing outright control

Safaricom’s results were previously reported on an ‘associate basis’, which meant they were not considered a contribution to Vodacom’s own revenue. This will change in future, although Safaricom will remain listed on the Nairobi Securities Exchange. Safaricom, which is a pioneering mobile money operator (in the form of M-Pesa), combines telecommunications, fintech and technology services. With revenue of more than $3 billion and a market capitalisation which briefly topped $10 billion in February 2026, after record interim dividends, Safaricom is the biggest company in East Africa.

‘This landmark transaction is a pivotal step in Vodacom’s journey to accelerate growth and deepen our impact across Africa,’ says Vodacom CEO Shameel Joosub. ‘Acquiring a controlling stake in Safaricom strengthens our position as a market leader, while at the same time unlocking new opportunities to drive digital and financial inclusion at scale in Kenya and Ethiopia.’ In 2021, Vodacom, with several partners, acquired the only private telecoms licence issued in Ethiopia.

Within the SA market, Vodacom has moved strongly into fibre, following the eventual approval of its R13 billion merger with Masiv by the Competition Commission. The lengthy saga goes back to 2021 and was only approved, on appeal, after the company agreed to a range of developmental conditions, notably installing fibre in poor and underserviced locations, including 1 million homes in ‘key areas’.

The route to regulatory approval was long and complicated, with the Competition Tribunal (which ruled against it) criticised for relying on media allegations of ‘collusion’ (between Vodacom and MTN) that had never been tested in court.

From an investment perspective, Gresty simply comments that ‘it is disappointing how long this issue was dragged out’. But he notes that it improved Vodacom’s position in the fibre space. ‘This may leave MTN exposed in this respect, with speculation ebbing and flowing around whether it [MTN] needs to resurrect its interest in Telkom,’ he says.

Telkom, the JSE’s third-biggest telecoms player, has been the one company that has thrived in recent times. Telkom’s share price soared 76% over the past 12 months and 120% since July 2024. Gresty comments that Telkom ‘has been surprisingly successful in capturing market share in South Africa’.

In fact, Telkom’s recent success shows that there is money to be made in the SA telecoms market. The former parastatal monopoly, which is still majority public owned, has demonstrated over the past two years that it has finally adjusted to competitive market conditions. Indeed, in some respects, it appears to have outstripped its competitors.

Telkom has focused on a fibre- and mobile-data driven strategy and has used artificial intelligence to optimise the customer experience especially in the pre-paid segment. In a trading update for the third quarter of 2025 (October to December), the company referenced a 29.3% increase in its number of mobile subscribers to 19.3 million.

‘The disciplined execution of our data-led strategy delivered quality data revenue growth in the third quarter and year-to date. This demonstrates our strength as South Africa’s digital backbone,’ group CEO Serame Taukobong commented on the trading update. The company reported a gross operating profit of 8.4% for the quarter. Taukobong took office in January 2024 and can probably take credit for Telkom’s turnaround. The company was able to resume dividend payments in mid-2025 after a four year-hiatus.

One element of Telkom’s improvement has been cost containment. Reflecting an acceptance of commercial imperatives, it has shifted capital spending, especially in fibre, from widespread deployment to demand-driven expansion.

At least as important has been its efforts to personalise its prepaid offering. SA consumers appear to be moving towards prepaid options rather than monthly contracts, driven by economic constraints and more generous data bundle rollovers. This is reflected in Telkom’s increased volumes of business while its major competitors are losing theirs. Vodacom had a 7.4% decline in its prepaid base in early 2026, while MTN had edged down 0.4%.

Cell C, owned by Blu Label through its subsidiary, the Prepaid Company, is the fourth-largest teleco on the JSE. Originally expected to compete head-to-head with MTN and Vodacom, it always operated at a disadvantage, having been awarded its licence six years behind its rivals.

Blu Label has worked hard to recapitalise Cell C and to revise its operating model. Cell C was listed separately on the JSE in November last year. The company is now a capital-light operator, which means it owns no infrastructure and sells itself as a facilitator of mobile virtual network operations (MVNOs).

It has national roaming contracts with MTN and Vodacom and offers its service to partners such as Capitec Connect, FNB Connect and Old Mutual. The MVNO market is expected to grow rapidly in SA, from its current 2% or so, driven by the captive subscribers associated with big banking and retail companies.

The question facing Cell C is whether it will be able to compete in this space. Gresty points out that the company ‘has re-emerged as a recapitalised (and thus financially viable) fourth player in the South African market, with a strong management team’. However, he notes, ‘its history still leaves many a bit sceptical about it emerging as a serious competitor. Nevertheless, it is certainly one to watch in years to come’.

The other two firms listed on the telecoms board – Huge Group and Telemaster – are much smaller niche operations. Huge is an investment holding company which focuses on the telecoms space and has a market capitalisation of about R250 million, and Telemaster, with a market cap of about R110 million, provides voice and data services to businesses. Both stocks have been extremely volatile over the past year (with movements up to 100%), which means speculators have been able to make good profits. But institutional investors find both of these smaller companies difficult to read and have tended to steer clear of them.

With the SA domestic market having failed to drive much growth in recent years, telecos have had to attempt to differentiate their offerings. Given its awkward history, it is remarkable that Telkom appears to have stolen a march on its competitors in this space. Cell C may follow suit, but the smaller players need to be wary of a possible comeback from the sector’s two deep-pocketed big players.

By David Christianson
Images: iStock